topic Second home interest deduction in Deductions & credits

Second home interest deduction

JGH59 — Wed, 08 Jan 2025 13:41:44 GMT

I bought and sold a second home in 2024. My primary home does not have a mortgage. The purchase was 6 months prior to the sale of the other second home. I assume that the interest is only deductible from one of the mortgages during the time both second homes were owned. Do I enter a lesser amount than indicated on the 1098 for one of the homes, ideally the one with the least interest per month?

Re: Second home interest deduction

pk — Wed, 08 Jan 2025 21:40:27 GMT

@JGH59 , IRC section 163 (h)3(B) and following subsections deal with acquisition indebtedness, interest thereon, qualified residences etc. The use always is aggregate indebtedness , main-residence and ONE other chose by the taxpayer. Thus for the year 2024 interest deduction is on aggregate indebtedness of 750,000 for a joint filer or 375,000 for single or MFS filer.

Therefore you get to choose which 2nd home is part of your qualified residence.

My reading also does not preclude each MFS filer having a separate / different 2nd home.

Perhaps , you should consult a tax professional especially if the interest deduction warrants the cost/effort.

Re: Second home interest deduction

JGH59 — Fri, 10 Jan 2025 18:15:04 GMT

My question is not a qualification question on whether the second home interest is deductible. Both homes qualify based in use. It is a question on how to get TurboTax to support the entry of the 1098 information without combining the two separate mortgages when they are going to be independent of each other for specific time frames. Turbotax needs to recognize that only one second home is allowed for a designated time frame and allow the allocation of the mortgage interest stated on the 1098.

Re: Second home interest deduction

JGH59 — Fri, 10 Jan 2025 18:17:20 GMT

Sorry, the previous reply was for a followup question/issue I entered today.

Re: Second home interest deduction

pk — Fri, 10 Jan 2025 18:24:15 GMT

@JGH59 , [personally and years ago, I have had similar situation and used the back-up sheet mechanism to enter the relevant interest costs, used the max amount of loan as a single entry. Thus my bnack up / detail sheet would show

Prop #1 -- address --- 01/01/xx till 06/30/xx ------- 3527

Prop#2 ----- address --- 07/01/xx till 12/31/xx -------- 4825

Total amount 8352

this will then transfer to right line of Schedule A or schedule-E as the case may be .

I was using Windows TurboTax Home & Business.

Does this help with your issue ?

Re: Second home interest deduction

JGH59 — Fri, 10 Jan 2025 18:28:40 GMT

Yes it does. I had hoped TurboTax would support it directly but I do understand utilizing back detail as an alternative. Thank you.